BARAGA COUNTY V MICHIGAN STATE TAX COMMISSION
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Michigan Supreme Court
Lansing, Michigan 48909
____________________________________________________________________________________________
C hief Justice
Justices
Maura D. Cor rigan
Michael F. Cavanagh
Elizabeth A. Weaver
Marilyn Kelly
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman
Opinion
____________________________________________________________________________________________________________________________
FILED JUNE 12, 2002
BARAGA COUNTY, BARAGA TOWNSHIP,
L’ANSE TOWNSHIP, ROSEMARY
HAATAJA, and AMY ST. ARNOLD,
Plaintiffs-Appellees,
v
No. 118922
STATE TAX COMMISSION,
Defendant-Appellant.
___________________________________
BEFORE THE ENTIRE COURT
CAVANAGH, J.
This is an action seeking an order of mandamus.
The
State Tax Commission seeks a determination whether a consent
judgment entered by the Michigan Tax Tribunal is enforceable
against defendant, which was not a party to the action before
the tribunal.
We hold that the consent judgment is not enforceable
against defendant because defendant was not a party to the
tribunal proceedings.
Under the rules of how privity applies
among governmental units that we adopt today, we further hold
that privity does not exist in this case to bind the state by
a judgment entered into by a subordinate political division.
Therefore, we reverse the decision of the Court of Appeals and
remand to the trial court for entry of a denial of plaintiffs’
request for an order of mandamus.
I
The history of this case dates back to 1992, when the
State Treasurer petitioned the Baraga Circuit Court for the
right to sell properties for delinquent taxes. The properties
were owned by members of the Keweenaw Bay Indian Community
(KBIC), including plaintiffs in this case, Haataja and St.
Arnold,
and
community’s
was
located
reservation.
within
The
the
boundaries
property
owners
of
the
objected,
arguing that under an 1854 treaty between the United States
and the Chippewa, the state of Michigan lacked jurisdiction to
impose ad valorem property taxes on lands owned by members of
the KBIC and located within the boundaries of the community’s
reservation.
After losing in the circuit court, the property owners
filed petitions with the tribunal, naming L’Anse Township and
Baraga Township1 as respondents.
1
Baraga County intervened in
Some of the property in question is located in one
township and some in the other township.
2
the tribunal proceedings as a respondent.
A settlement was
reached during the tribunal proceedings, which resulted in a
consent judgment being entered in May 1994.
properties
owned
by
tribal
members
residing
Although the
within
the
reservation boundaries were to be “removed” from the tax and
assessment rolls and were listed as exempt, the townships and
county were required to have their township assessors continue
to assess the properties in the same way they assess nontribal
member
owned
separately.
property
and
to
maintain
such
information
This was to allow for the proper calculation of
“payment in lieu of taxes” to be billed to the KBIC, which was
to make a payment in lieu of taxes for the full amount of the
tax that would be due if the
nontribal member.
property were owned by a
For almost five years, the townships, the
KBIC, and tribal members apparently abided by the consent
judgment.
On December 28, 1998, defendant issued Bulletin No. 18,
regarding Indian-owned lands.
In that bulletin, defendant
notified local assessors of the June 8, 1998, decision of the
United States Supreme Court in Cass Co, Minn v Leech Lake Band
of Chippewa Indians, 524 US 103; 118 S Ct 1904; 141 L Ed 2d 90
(1998).
The bulletin indicated that it was defendant’s
position that Indian lands owned in trust by the United States
Government were exempt from the Michigan General Property Tax,
3
MCL 211.1 et seq.
Indian
Lands owned in fee by individual Indians or
communities
were
not
exempt
and
were
assessable.
Defendant further advised local assessors that any Indian
lands not held in trust by the United States that had been
previously
exempted
were
no
longer
qualified
for
such
exemption and should be placed upon the assessment rolls.
Defendant also advised local assessors that agreements to
exempt from, and accept payments in lieu of, taxes were not
authorized by law, and that appropriate steps should be taken
to correct these situations.
Pursuant to Bulletin No. 18, the assessor for L’Anse and
Baraga Townships contacted defendant in regard to certain
lands within the townships that had previously been exempted
through the May 1994 consent judgment.
The assessor was
advised to place the previously exempted properties on the
assessment roll unless they were held in trust by the federal
government, which gave rise to the present dispute.
Plaintiffs (the Indian landowners, Baraga and L’Anse
Townships, and Baraga County) sought mandamus and an order to
show cause in the Baraga Circuit Court.
The trial court
ordered mandamus, and the Court of Appeals affirmed, holding
that
defendant
was
in
privity
with
the
local
units
of
government in regard to property tax appeals before the
tribunal and, as such, the doctrine of res judicata applied to
4
bind defendant to the terms of consent judgments entered by
the Tax Tribunal in matters where defendant was not a party.2
We granted defendant’s application for leave to appeal.
II
We must first determine whether the trial court properly
issued the order of mandamus.
An order of mandamus will only
be issued if a plaintiff proves it has a “‘clear legal right
to performance of the specific duty sought to be compelled’
and the defendant has a ‘clear legal duty to perform such act
. . . .’”
In re MCI Telecommunications, 460 Mich 396, 443
444; 596 NW2d 164 (1999), quoting Toan v McGinn, 271 Mich 28,
34; 260 NW 108 (1935).
We review a trial court’s decision
regarding an order of mandamus for abuse of discretion.
Id.
at 443.
III
A.
Privity
Defendant asserts that plaintiffs did not establish they
had a “clear legal right” to force defendant to abide by the
terms of the consent judgment because defendant was not a
party to the tribunal proceedings.
The Court of Appeals
disagreed and concluded that the consent judgment was binding
on defendant under the principle of res judicata.
There are
three prerequisites to the application of the doctrine of res
2
243 Mich App 452, 454-456; 622 NW2d 109 (2000).
5
judicata: “a prior decision on the merits; the issues must
have been resolved in the first case . . . ; and both actions
must be between the same parties or their privies.”
Sloan v
Madison Heights, 425 Mich 288, 295; 389 NW2d 418 (1986).
Further, the burden of proving the applicability of the
doctrine of res judicata is on the party asserting it.
Id.
We disagree with the Court of Appeals that defendant was
in
privity
Township.3
with
The
plaintiffs
Court
of
Baraga
Appeals
Township
stated
that
and
L’Anse
“[p]rivity
between a party and a nonparty requires both a ‘substantial
identity
of
interests’
and
a
‘working
or
functional
relationship . . . in which the interests of the nonparty are
presented and protected by the party in the litigation.’” 243
Mich App 456, quoting Phinisee v Rogers, 229 Mich App 547,
553-554; 582 NW2d 852 (1998) (citations and internal quotation
marks omitted).
This definition of privity was taken from
Phinisee, an action involving a paternity judgment, in which
the Court of Appeals adopted the definition from a Colorado
paternity
case.4
Thus,
the
Court
of
Appeals
applied
a
3
Because we hold that plaintiffs have failed to prove
privity, we need not decide whether plaintiffs have satisfied
the other requirements for the application of res judicata.
Sloan, 425 Mich 295.
4
SOV v Colorado, 914 P2d 355, 360 (Colo, 1996), quoting
Public Service Co v Osmose Wood Preserving, Inc, 813 P2d 785,
787 (Colo App, 1991) (involving an indemnification agreement).
6
definition of privity that originated in cases involving
private parties.
In this case, the parties involved are
governmental units.
There is law directly describing how privity applies
among governmental units.
American
Jurisprudence
Both Corpus Juris Secundum and
Second
privity in this situation.
indicate
50 CJS,
that
there
is
no
§ 869, Judgments, p 443,
states:
A state may be bound by a judgment for or
against a public officer, or agency, but only with
respect to a matter concerning which he or the
agency is authorized to represent it, and it is not
bound by a judgment to which a subordinate
political subdivision was a party in the absence of
a showing that such political body had an interest
in the litigation as a trustee for the state.
47 Am Jur 2d, Judgments, § 700, p 167, states:
Courts have also generally found that no
privity
exists
between
state
and
federal
governments, between the governments of different
states, or between state and local governments.
We agree with both these statements.
As 50 CJS, § 869
indicates, there may be specific circumstances under which the
state may be bound by a judgment to which a subordinate
political division was a party and the state was not, such as
when the subordinate political subdivision is found to have
been acting as a trustee for the state.
Such circumstances
are not present here.
While the definition of privity applied by the Court of
7
Appeals may be applicable in determining privity between
private parties, a determination that is not before this
Court, we hold today that privity does not exist in this case
to bind the state by a judgment entered into by a subordinate
political division.
B.
Differing Roles of Townships and the Commissions
The Court of Appeals concluded that defendant was in
privity with plaintiffs Baraga Township and L’Anse Township,
reasoning:
Both townships were required by statute to
carry out assessments of properties within their
boundaries.
MCL 211.10.
Defendant was also
charged by statute to “take such measures as will
secure the enforcement of the provisions of this
act, to the end that all the properties of this
state liable to assessment for taxation shall be
placed upon the assessment rolls . . . .”
MCL
211.150(1). The governmental entities that signed
the consent judgment were charged with assessing
property and collecting taxes, and, therefore, had
a
“substantial
identity
of
interests”
with
defendant and represented the same legal right.
The townships secured that interest when they
negotiated to have the KBIC make payments in lieu
of the taxes that normally would have been
assessed.
[Baraga Co, 243 Mich App 456-457
(citation omitted).]
The Court of Appeals erred in focusing on the fact that
the townships carry out the same set of property tax laws that
defendant is required to enforce.
Rather, the Court should
have focused on the differing roles of the townships, to carry
out
the
tax
laws,
versus
defendant,
to
townships fail to carry out their duties.
8
step
in
if
the
It properly noted
that, under MCL 211.10, the townships were required to carry
out
assessments
of
properties
within
their
boundaries.
However, the townships, in defendant’s view, removed taxable
property from the tax rolls.
type
of
situation
in
This must be an example of the
which
defendant
is
charged
with
intervening so as to secure uniformity in the implementation
of the provisions of the General Property Tax Act.
MCL
211.150 states:
It shall be the duty of the commission: (1) To
have and exercise general supervision over the
supervisors and other assessing officers of this
state, and to take such measures as will secure the
enforcement of the provisions of this act, to the
end that all the properties of this state liable to
assessment for taxation shall be placed upon the
assessment rolls and assessed at that proportion of
true cash value which the legislature from time to
time shall provide pursuant to the provisions of
article 9, section 3 of the constitution.
Given the supervisory role that the Legislature has assigned
to defendant over local assessors, it would be inconsistent
with the statutory scheme to allow agreements entered into by
such local assessors to bind defendant.
Accordingly, we fail
to see, even using the definition of privity applied by the
Court of Appeals, how the parties could have a “substantial
identity of interests” and represent the same legal right when
defendant is empowered to intervene if it concludes that
municipalities have failed to place taxable property on the
tax
rolls
and
defendant
is
9
specifically
charged
with
exercising general supervision over local assessors.
Further, we reject the Court of Appeals reasoning that
this is all somewhat academic because “[t]he townships secured
that interest [the interest in proper payment of taxes] when
they negotiated to have the KBIC make payments in lieu of the
taxes that normally would have been assessed.”
457.
243 Mich App
Whether the taxes effectively got paid is important, of
course, but it is not to this alone that the statute is
directed.
ensuring
Under MCL 211.150(1), defendant is charged with
that
assessment
all
rolls.5
taxable
properties
Plaintiffs
and
are
placed
defendant
on
cannot
the
be
representing the same legal right or have a substantial
identity of interests if the townships purposefully did not
place taxable properties on the assessment rolls, an action
that defendant is required to ensure.
C.
Plaintiffs
ask
this
Estoppel
Court
to
find
privity
between
defendant and the townships, arguing that the history of this
case creates an estoppel to deny privity.
In support of this
theory, plaintiffs claim that the Baraga Township supervisor
5
That this is indeed not academic can be seen from the
fact that certain state-to-local aid formulas key on those
very rolls and their cumulative taxable values. See, e.g.,
MCL 380.1226 (requiring a county treasurer to provide a
statement of assessed valuation of each school district or
fraction of a school district in a county).
10
“repeatedly contacted” a member of the commission regarding
the taxable status of the properties at issue for 1992-1994
and informed him of the proceedings.
Moreover, plaintiffs
assert that the supervisor repeatedly requested guidance from
defendant, but the requests were ignored, thus, consigning the
townships to represent themselves in the tribunal proceedings.
Given all this, plaintiffs argue that there was acquiescence
so as to estop the State Tax Commission from challenging the
outcome of the litigation.
In countering this estoppel theory, defendant argues
here, as it did in the Court of Appeals, that nothing in the
legislation establishing lines of authority provides that the
State Tax Commission must render aid to local assessors or be
estopped to assert certain positions because of that.
The
Court of Appeals, in deciding for plaintiffs disagreed.
The
Court relied on MCL 209.104 to conclude that defendant was
“statutorily required” to render assistance to plaintiffs.
MCL 209.104 states in part:
The state tax commission shall have general
supervision of the administration of the tax laws
of the state, and shall render such assistance and
give such advice and counsel to the assessing
officers of the state as they may deem necessary
and essential to the proper administration of the
laws governing assessments and the levying of taxes
in this state.
We disagree that this section required defendant to
provide
assistance
merely
because
11
an
assessing
officer
requested it.
It follows, therefore, that we also disagree
with the estoppel argument that is based upon this flawed
“requirement to assist” concept.
The statute states that the commission “shall render such
assistance . . . as they may deem necessary and essential
. . . .”6
This section of the statute is designed to outline
the duties of the State Tax Commission.
One of those duties
is to provide “advice and counsel to the assessing officers of
the state.”
The statute then qualifies this obligation by
providing that the advice shall be “as they may deem necessary
and
essential
to
the
proper
administration
of
the
laws
governing assessments and the levying of taxes in this state.”
(Emphasis added.)
Because the predicate of the statutory
scheme is that defendant possesses greater expertise than the
subordinate assessing officers, it is logically necessary that
defendant–not the recipients of any advice–must determine what
6
While we recognize that “they” is a plural pronoun,
“they,” as used in this statutory provision, must refer to the
“state tax commission” even though this is a singular noun.
This construction is required to make the rest of the statute
organizationally coherent.
[T]he entire act must be read, and the
interpretation to be given to a particular word in
one section arrived at after due consideration of
every other section so as to produce, if possible,
a harmonious and consistent enactment as a whole.
[Grand Rapids v Crocker, 219 Mich 178, 182-183; 189
NW 221 (1922).]
12
advice is “necessary and essential.”
Thus, construing the statute in this fashion, it is
within the discretion of defendant when or if it renders
assistance.
Defendant is never “required,” except by its own
good-faith judgment, to render assistance to anyone under this
statute. Therefore, we refuse to find privity on the basis of
an estoppel theory.
D.
We
would
also
Practical Efforts
point
out
that
defendant
argues
convincingly that plaintiffs’ position is unworkable if for no
other reason than that there could be between 7,000 and 10,000
property tax disputes filed yearly in the tribunal, most of
which are disposed of through consent judgments.
Clearly,
defendant could not have been expected by the Legislature to
routinely monitor these proceedings to ascertain whether the
state’s interests are being adequately represented by the
local units of government.
Thus, in addition to the language
of the statute controlling the relationship between the State
Tax Commission and the local assessors, we note that the way
these
cases
are
handled
militates
against
plaintiffs’
position.
IV
The consent judgment entered by the tribunal is not
enforceable against defendant, which was not a party to the
13
tribunal proceedings.
Privity does not exist in this case to
bind the state by a judgment entered into by a subordinate
political division. Therefore, res judicata cannot be applied
to bind defendant by the consent judgment.
Without res
judicata, plaintiffs cannot satisfy the requirements for an
order of mandamus because they have no legal right to the
performance requested.
Accordingly, we reverse the judgment
of the Court of Appeals and remand this case to the trial
court for entry of a denial of plaintiffs’ request for an
order of mandamus.
CORRIGAN , C.J., and WEAVER , KELLY , TAYLOR , YOUNG , and MARKMAN,
JJ., concurred with CAVANAGH , J.
14
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